tv Bloomberg Markets Asia Bloomberg May 6, 2018 9:00pm-12:00am EDT
[ whirring sound ] you want a cookie? it's a drone! i know. find your phone easily with the xfinity voice remote. one more way comcast is working to fit into your life, not the other way around. david: asian markets are mixed. japanese shares falling after the return from holidays. the dollar is weakening. leaves --de team trump's trade team leaves beijing. with little except the promise a more talking. dale dudley said it is too early to decide victory. i am david english here in hong kong. aidi: oil prices rise with the trump decision. why china has the most of fear from the spike.
this is bloomberg markets: asia. david: new trading week. we are at a jump up point. equity markets down three straight weeks. still unimpressed despite the fact the bar has been set pretty low for equity markets. a lot of central banks decisions this week to look forward. stillsere -- they were search-and-replace to latch onto to give a sense of direction across these markets. todi: a couple of stories seize other themes where we continue to look at the strength of the u.s. dollar it was a. pretty good week -- u.s. dollar. it was a pretty good week. the other story being oil and how that feeds into inflation.
weakness across wage growth. let's look at how markets are kicking off this week. sophie: after the golden week, not much in the way of shares. it is being lowered by electronics makers. gains extended for the asx 200, which had swung to a year-to-date gain given last week's advance. we are seeing's toxics than losses for a third day and malaysia very much in focus, given this is a big week for the nation. we do have elections on may 9 and the central bank it -- 2.8% ahead of the
stocks. increase ina 29% first-quarter profit. with net profit coming in or nomura expecting a negative reaction. a check on tsmc after morris chang told us that the company is concerned about the china trade spots. he noted that it is a new challenge of what he faced in the past and what his successors will have to take on. taiex.a look at the we have a potential catalyst later this afternoon. we will get trade data for april. we are expecting a rebound. apple jumped to a fresh eye. buffett opt is stake in the first quarter.
nine you technology -- nanya technology could affect tech sports -- affect exports. david: we will be heading to paging with tom mackenzie for an update of the progress in trade talks or the lack thereof. paul allen is in sydney with the first word news. paul: iran has spoken against higher oil prices, signaling a split. saudi arabia showing agreement .o keep tightening markets. -- to keep tightening markets. the county has begun after lebanon's first parliamentary elections in nine years. the main battle is between a western and saudi-backed coalition and an ironic-backed
hezbollah. the incoming government will have to take steps to control the world's third-largest debt burden to receive $11 billion. markete is so from the that majority will be formed to of thent the resolution paris conference. isl: rudy giuliani says he leaning against donald trump. giuliani says a discussion will be a trap and repeated a call for an investigation to be shut down. he also says trump would not have to comply with a subpoena if mueller issues one. >> well, we don't have to appear in he's the president of the united states.
president clinton negotiated a deal. paul: theresa may has declared her absolute determination to make a success of leaving the eu as she comes in a new pressure from conservatives on both sides of the brexit debate. the --in pledged to lead leave the circle market and the .ustoms union global news 24 hours a day, powered by more than 2700 journalists and analysts in over 120 countries. i'm paul allen. this is bloomberg. haidi: divisions between u.s. and china were laid bare after high-level trade talks in beijing with little to no traction at all on major issues. tom mackenzie joins us now from beijing with a brief talk. expectations going into the talks. was anything achieved?
really, except for some specific claims that they will continue to work together. what we do have is a crystallization of the deep divisions between the two sides, and the fact that the u.s. came forward with a list of demands that looked like they were designed to really poked china in the ribs. so we want to see your surplus you have with the is being reduced by $200 billion by 2020. they want to see the chinese setback the support but this advanced manufacturing policy they have and also quarterly reviews where the u.s. would be leading over china's shoulder, checking on their progress and then imposing additional tariffs. for the chinese, they easily fanciful when you look at.
china said it wants to see the u.s. lower barriers to exports chemchina says they want to see the u.s. drop its investigation to defy technology. both sides coming up with a list of demands. it will take a herculean effort at this stage to close that divide. haidi: where do we go from here? where does that leave us? a lot of it will come down to the mood of president trump. we heard from him over the weekend, saying he was determined to rework the relationship with china, hinting action.take we have this deadline effectively of may 22, which is the end of the consultation period on the first $50 billion worth of tariffs the trump administration has proposed. $50 billionhe imposed. china would reply with its own terror. is media says there
disagreements on some issues and use agreement on others. there are concerns about what this might mean if tensions between the u.s. and china spiral beyond to the g20 nations and see if that impacts supply. tamara beijing. annie. is tomorrow in beijing. tom: trump has been pretty laser focused on this issue of the deficit that the u.s. has with china, the trade imbalance as he sees it. he said that again, spoke about it again over the weekend. anyone who tells you that trade is it is wrong. that is what president trump
said over the weekend. if we see a big tick up in imports and the forecast is supposed to increase by about 16% after the month of april, exports would increase about 17%. if you do see a reduction in the it might swayen the trump administration december rate. the child administration. there is an increased interest. numbers will be out and sometimes tomorrow hong kong time. david: thank you so much. t's geme thohts on these big issues on trade. of asia.he cohead what matters to you when it
comes to trade talks? where do we go next? >> i think the lack of progress is a concern. the issue now is not only do we have that made 22 deadline in terms of coming up with the 22,ffs, but also, march trump instructed steve mnuchin from the treasury department 60 days to come up with further measures against chinese investments into the united days, which risks putting another slap in the face to china. china itself is hitting a dilemma. we had on friday the first quarter of balance and an account deficit. in addition to that, when we are trade-weighted renminbi that the pboc watches closely, the february highs got an appreciation against the trade-weighted partners. it really puts the pressures on china to allow dollar-renminbi to go higher. experiencing a for the
tightening of financial conditions and it has to give some ground, particularly when you look at the current account. china showed experiencing surplus, not a deficit at this stage. tomorrow, it will be important to see where we are on the trade cycle china. david: is it reasonable to assume they will make any headway when it comes to the trade deficit. you are asking for china's to come out and basically take the deficit and i it in half. is that. a reasonable expectation? >> it is. it is very difficult. you are talking about squeezing toothpaste into a two. if you cut with china, those bilateral additions will -- will move soon malaysia, thailand, vietnam. make some adjustment on a headline level, which would be appropriate, pleasing to both sides.
was is also important is how the talks with north korea ago. go. i think the $200 billion, cutting the trade deficit by $200 billion, i would take with a large minutes of your but it is an opening salvo -- i would take it with a grain of salt. but it is an opening salvo. it gets worse before it gets better. haidi: does this remain a threat?nd and that it will go on many more rounds of talks and tensions? >> yeah. i think that is a valid point. my impression is that there will be some upside from the dollar china, particularly because of -- broad strength of the dollar. we have the.
elections in the u.s. campaign season is already starting. there is a level to which how hard trump can push on this without reverberating in terms of a decline in investment. overall, the numbers suggested, the $100 billion by the u.s. and $50 million by china, those in a certain sense or not damaging to the extent that they cancel of gdp.- 1% or 2% they account for much smaller amount. the greater you bring that risk, particularly on the softer like emi, soft data, like pmi.ta, we have seen tillerson the market, in particular for risk assets.
david: bill dudley says he is optimistic about u.s. growth while adding it is too early to make the call on a victory on inflation. dudley welcomed the return of market volatility. >> i don't think the federal reserve cares about financial markets per se. we care about two goals, sustainable unemployment and the context of price stability.
the financial markets are not completely irrelevant. but our goal is not a given level of stock market or volatility of financial markets. i am happy that volatility in financial markets ticked up a little bit. the low period of volatility we had the last three years was potentially dangerous because people were hitting confident that the markets had little risk. the fact that we have had a little bit of an upturn in hastility this year and shaken the tree branches a bit and shaken up the week products, like the inverse vix exchange-traded products, that is a good thing. market willhe stock go down a lot and the interest rate will go up a lot. if it changes the economic outlook, that would have an policy.n monetary but only for changes the economic outlook will it have application for how the federal reserve index monetary policy. you mentioned earlier that
the fed has been more effective .ommunicating to the market >> we try. when we did a number of rate hikes we said we would do it your earlier, the markets as we are committed getting really well. that was last year. when we don't do the number of rate hikes we said we would get the beginning of the year, the market says we are not communication well. it depends a little bit on how the environment is unfolding. we are trying to d -- to be more transparent. the fed is moving more to transparency, not only the last two years, but several decades. prior to 1994, the federal reserve would not even announce that it made a monetary policy change. you had to an further monetary policy change by the market
.peration from that, you wouldn't for that the fed have actually changed the level of interest rates. i'm a big proponent of march as parents in. i think it has served the federal reserve well. if you are transparent and market participants understand how the fed will react to incoming information, that allows markets to anticipate what the fed will do. that makes the linkage between the fed and financial conditions more robust. that's what really matters. at the end of the day, the economy does not get driven by the federal funds rate. it gets driven by how the federal fund rate affects financial conditions. and that's financial conditions that drove the economy. more transparency titans that linkage. that probably makes monetary policy more effective. haidi: an exclusive chat with bill dudley. let me bring and claudia at bank of america -- let me bring in
claudia add bank of america merrill lynch. do the labor market numbers on the narrative at all? >> no. in a certain sense, what we saw was unemployment rate break the 4% level, upward revisions to the previous month. the market in the u.s. is very robust and we had average hourly earnings above year-over-year. again, labor inflation and labor market, the crux of the matter, where the expectation is that, at some point, the shoe will drop in inflation will come up. that links back to delhi saying the battle is too early to declare the victory on the inflation over. it is justifying shaken the
dollar we are seeing. so it does not change our view, no. haidi: in terms of the dollar, last week's weekly gain was a biggest we have had all year. have the fundamentals changed? we've got sure is getting squeezed out. is that pretty much done? is there any reason to expect strength going forward? >> i think so. there is still reason to expect forward.rength going what is revealed in the emerging market complex is the ability for some of the emerging markets to really pursue independent monetary policy because of the strength of the dollar and how that may lead in terms of negative feedback and currency weakness and higher inflation and the need to raise rates. the central banks have been reluctant hikers. they want to focus more on growth, not late cycle like the u.s., we are early midcycle and we can afford to see easy. that is starting to become unhinged. we are getting central banks and
some of the policymakers china to reassure investors. so friday, the argentine central coordinatedwith measures tries to bolster credibility, not only by hiking rates or borrowing rates at 40%, but by doing some budget measures and last week, we signed in asia come up with a cup fuel subsidy. -- thethe result of reserve bank of india ready to spoil the market. or.ill get choppy the dollar goes higher from here against the emerging markets. that is still in place. you are recommending long and both these pairs. our year in forecast with
dollar-china is at 680. we have plenty of room to run on that. we will continue to see, as i mentioned previously, pressure builds to move china higher because we are reaching the limit on appreciation. that risk of trade in the earlier segment, overhanging on tona means that they have pullback on deleveraging and tightening monetary conditions.
david: minute of the way of the open of cash markets here in hong kong. the pboc is skipping open market operations today, saying liquidity in the banking system is at a relatively high levels. not much in terms of eco-data concerns, not a lot of options in fixed income it nothing and government, as well. we did get earnings out of alibaba on friday. does that filter into the life of tencent? we will see in 20 minutes from now. heidi
? of course with the bank of england being a highlight, that move was -- has pretty much disappeared. get what traders are calling maybe a hawkish hold from the bankers, anglin governors later. we are looking for direction. a lot of the pboc is saying liquidity is wonderful. let's get it to sophie for a look at the open in hong kong and in shanghai. sophie: kicking it off and was happening in shanghai, benchmarks rise .2%, the biggest boost coming from banking and energy stocks. kong, the hans saying is snapping a three-day decline. focusing on chinese consumer names after alibaba sword friday after posting better-than-expected earnings. , alibaba regained its
title as china's most viable company, overtaking tencent which might deliver weaker profits on may 16. margins also under pressure for tencent but rising investment in ,isual content, as well as ai but tencent is gaining ground of a 1.4% in hong kong. the biggest boost to the benchmark there. we are keeping an eye on chipper rated stocks after china is set of $37.4 a new fund billion to spur the development of the semiconductor industry. it is set to snap a three-day drop but it's buyback plan did not impress too much. taking a look at lenovo, under pressure here. movess where we see changes to the hans saying there it we check in on csb see pharma, which is rising on its inclusion while lenovo is sliding on exclusion. let's check on companies in the
distance and shipping operations in china. li & fung have businesses that make more than half of the revenue from frates and services. alibaba owns a stake in white t o. asset holdings at about .5%, china's second-largest courier. guys? haidi: let's get the first word news with paul allen in sydney. paul: sanctions are not the willingness to remove weapons from the peninsula. the u.s. is misleading the public eye characterizing those steps as a sign of weakness. ofs accusing washington trying to ramp up tensions ahead of a meeting between kim jong-un and donald trump. south korean newspapers said the summit will happen in singapore in june. the bank of korea moves to clarify comments that the central bank should raise its
benchmark interest rates when it becomes possible to do so. hours after the remark, the be ok delivered a statement saying he was speaking in general terms. they say imbalances will increase while the economy and inflation grow. the philippines central bank governor has given further clues he's preparing to raise interest rates as soon as this week. he told bloomberg television he's concerned with friday's starting showing inflation surging to the highest in five years. he says the decision on back-to-back hikes will depend on an assessment of price growth momentum. >> this year, we are really seeing a step up in inflation. it probably hasn't been yet. earlier, we mentioned it might be middle of the year before we see a tapering or an acceleration of inflation. back to our target range.
the french finance minister says strikes and excessive salary demands by unions at klm group could sink in europe's largest airline. they say the claims are unjustified and employees must share responsibility. the ceo resigned after failing to reach wage agreement with employees. shares dropped the most in six months after a warning for your results may drop. global news 24 hours a day both on air and tic-toc, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. the former governor has sounded a warning when it comes to china's potential dominance of high-tech industries, including artificial intelligence. the business economist told twitter that aging intervened in the market.
>> one of the bigger fears of the trump administration is not so much that that growth policy will continue, but that the presence in certain industries will pick up significantly more, especially in the high-tech areas. did whatis, if china it did in steel and aluminum in other industries, such as artificial intelligence, chip manufacturing, aircraft manufacturing, then whatever advantage the u.s. had will evaporate the as it will get shut out of those businesses. businessesone of the -- reasons it climbed rapidly is because they did change their exchange rate even though that pilot wto rules. -- violated wto rules. is that legitimate concern that china will to you what it's going to do and knows what it needs to do but will continue to do what it most needs to do, which is keep growing it's a
economy weather exports or domestic demand? >> i do think that there was concern than about the exchange rate. i think today the exchange rate is no longer the concern. it's a more market-driven exchange rate. there is concern about subsidies given to these industries about china's respect for intellectual property and will they -- whether there has been coercion by the government. you have to share your intellectual property if you want to do business here or with private parties stealing intellectual property. i think there is also a difference in what china is doing, which should make the u.s. feel a little more confident. much easier to grow when you are in the industrialization not in the frontier because the growth for aluminum and steel doesn't take rocket science. what they need now is rocket science. they are at the frontier. the chinese are double upping
their own capabilities here and that's viable to the world. but i think it's not going to be as easy. not saying there is no reason for concern in industrial countries, but i think there are partnerships, there are ways of making this work much better. and it shouldn't be driven primarily by a fear of china. i think is going to be harder for china to stay at the front of these areas. there is room for win-win discussion. that was the former r.b.i. governor speaking to kathleen hays. you can follow more on the story. it gounction mliv of there and get -- mliv . commentary. get sometimes there is banter there, as well from our editors. find out what is affecting your investments. check that out.
haidi: this is bloomberg markets asia. i'm haidi lun in sydney. david: i'm david english in hong kong. lots to look forward to this week. we will talk about that in a minute. look at my bloomberg terminal right now. you can find this on cpsc. that's your commodities forecast function here. essentially, red indicates bearish, neutral is in yellow, and green is almost intuitive. we are coming off a leak where bullish bets are on the way up. the past two weeks might indicate we might be pushing on the high side. -- thisseeing this here did hear slightly tilt towards bearishness. old story.ore on the
impacts help understand the broader outlook. what impact what a snap back in iran have on the oil market? anna: obviously a lot of analysts are calling this a bullish move. one of the predictions of we have is from fte and industry consultants. they predict about 200,000 to about 500,000 barrels. oft's 500,000 barrels a day oil that will be cut from the market and snaps back sanctions on iran. predictinge them 200,000-300,000 barrels a day of oil being cut out of iran if the u.s. pulls out. haidi: what analysts are saying about the outlook? anna: i think a lot of analysts are very optimistic, very
bullish about what it will do to the oil market. a lot has been priced in. we see oil rallying hard the past couple of weeks. when israel's prime minister came out with those documents, we saw oil rise higher. we did have been saying they see oil reaching about $80 a barrel. right now it's about $74 a barrel. we also have some that say a lot has been priced in but we still have significant upside. we did have one contrarian view. they are saying oil may rally on these come up by next year the tensions are going to ease and oil might slump. and they are warning that market maker that 10-60% year on year next year. haidi: thank you so much for that. lots to look at here. whethersident trump on
he will stay or abandon the iran nuclear deal no later than may 12. that will have some ripple effects for the oil markets. let's check on stocks when it comes to the chinese big oil companies listed in training in hong kong. we are taking a look outside, riding high on the latest wave of momentum. dave: there is an increment there. let's look at the broader training picture. resident donald trump is back from beijing and in the states with a little more than a promise to talk further. westech take a look at the two days of negotiations with our next guest who provides consulting on a range of trade issues. executive editor and founder of the asian trade center. deborah, pleasure to have you on the program. i'm guessing it's a good thing that they agreed to talk
further. is there anything i can look forward to? not really actually. and in fact, dates for the next announced talks are either unclear or fairly far away, which i think is a bit disturbing given how fast those tariffs could be imposed by the u.s. and counterterrorist by the chinese. i think it's a little disturbing they met for two days and came away with essentially not much concrete action and no firm commitment to meet again in the near term. i think that's disturbing actually. david: i look at some of these list of demands and i had to guess are there on my radio program, who described the proposed wishlist. the americans asking china to dismantle their economy as it stands. do you think that's an accurate description? guest: i do.
i think it's a very difficult set of demands, notwithstanding whatever your views are on how the chinese might retaliate, respond, whether they are actually at fault, at risk, whatever. this was a maximum set of demand by the united states and it essentially said we do want you to fundamentally reform your economic structure. that is a nonstarter inside of china. then you say, how are you going to resolve this dispute? if one side wants of reform and the other side is not interested in fundamental reforms, how do you get the consensus and heady get to consensus -- how do you get to consensus in the short run? againstall taking place the backdrop of looming economic sanctions. the u.s. side is poised to push the trigger if they choose to do so by the end of this month. that's the tough part.
this is not an easy negotiation at the best of times now you are doing it under the threat of sanctions and counter sanctions that could be imposed at any moment. how would you know you achieved victory under these broad and sweeping decisions with no clear goal posts? this is a really tough one. these going into negotiations, the chinese have come out with a list of their nonnegotiable's. they were never going to agree with a number when it comes to the trade deficit. what does this tell you about the amount or the lack of good faith in these negotiations? the fact washington went in and made these belligerent or unrealistic requests? here's the big question. are these demands nonnegotiable, is the u.s.eally decision and you can't get away
from those decisions? or is this a negotiating tactic, as in weak stakeout our extreme positions and carve away until you meet somewhere in the middle? the markets seem to the assuming donald trump especially will back down from most of these thats as he has done with koreans, potentially with nasa, maybe with the chinese. is, if you guess wrong, and he'not planng to ba down, then we have the looming specter of the u.s. china war, which is deeply problematic not just for u.s. and chinese companies, but for a much broader segment of the economic system. that's an interesting challenge. how seriously do you take this? how seriously do you hope things will be resolved in a reasonable short-term way? the uncertainty and risk continues to grow day by day. haidi: what about the other complicated side?
you can argue it's more difficult than the tariff side, which is this perceived u.s. attempt to curtail china's tech ambitions. do you think that will come to a head at some point? guest: i think that's also problematic. there are many people who keep asking, doesn't the united states have a point? don't the chinese have a different system? of course. they do have a different system. the u.s. does have legitimate complaints. there are complaints many countries have made about how china goes about its economic is this. the system itself, the global economic system doesn't seem well-suited to dealing with a player like a china. so there needs to be some revisions at the system level. how do you get there? how do you solve a problem like a china when the system doesn't work very well and when you don't have a lot of tools at your disposal to get you where you need to go? how do you solve that? and the challenge, i think, is that this administration doesn't
seem to be thinking creatively, or at least doesn't seem to be thinking about how to get at this by working with others. they want to do it unilaterally and they want to use tools like tariffs and threats to get the chinese to respond. that doesn't seem to be a productive way to go about what is ultimately for the u.s. a fundamental reform of the chinese system. i think this is going to be very problematic. let's talk quickly, about nafta. what expectations should they have? another one. while the u.s. is playing high-skes poker with the chinese, they are engaged in another challenging negotiation with nafta with the canadians and mexicans and the problem there is the clock. tothe united states wants renegotiate nafta and get it done quickly, they need to because the u.s. calendar is not cooperative.
they need to get this done very fast, within the next one to two weeks. otherwise the u.s. calendar shifts against the united states and of they have to deal with a new congress after november. that's a problem. they have to deal with a new administration potentially in mexico. that's a problem. getting renegotiating of nafta, they are really running out of time. what next? if you run out of time, do start over? do you go with what you have? it's unclear. david: why do i feel more depressed after talking to you? i guess it's a good thing. thank you so much. guest: i would love to have better news. david: remember for our clients here, interact with a lot of charts here. catch up on the analysis we mentioned. did them for future use and future reference. check it out. this is bloomberg. ♪
david: china's liquor is known for backing a punch and investors see what -- see that the makers are doing the same. a top fund manager says by joe. why? that's right. we spoke to one of the fund managers who is one of the top returners in china. a third of his portfolio is don't -- donated to these us stocks. thatf the major reasons is if we look at the two top five havingn china, despite risen over 200%, they are still traded at a discount to global liquor peers such as ron forman,
cointreau. they are also trading at a discount to chinese filmmakers -- beer makers. one thing they have in common is that they have a high level of cash flow which to him, is linked to strong dividend yield. what are these liquor stocks -- liquor tears? >> this is something that investors and analysts have been wondering about and what they say is that some of that is linked to caution because of the relatively rocky history of the sector. in 2012, when president xi started his anticorruption campaign in china, these stocks took a huge battering simply because it was popular amongst government officials. when the campaign began, it was for britain to have oozy lunches
and gifting each other these walls. that demand flattened out. what we are seeing is quickly that rising middle class of afford that can out these ultra-premium liquors and have to take over that demand. bottles atnt these their family lunches and celebrations. haidi: thank you so much. rental chain, bloomberg's charter consumer reporter in shanghai. just beware the hangover. let's get you a quick check on the is flash headlines. a group representing indian storeowners is proposing walmarts deal with flip card. the confederation says the deal is a competition to india and considering legal action. approves therd sale of 75% of the company to a group led by walmart. david: we may suit and sete
nestle's arrival. sources say it should be for the starbucks business that sells coffee bean. an agreement may be announced as early as monday. a deal would help nestle build its resins and the coffee market after it added beach brands and also chameleons cold brew. disney's latest avengers option has become the fastest movie ever to not show $1 billion in global ticket sales. aroundsales helped turn the box office income even before it opened in china this week. salesked north american at $112 million. coming up on the next hour of bloomberg markets, we speak to jeffrey morgan's market strategist in a few minutes time. really talking about expectations for the u.s. dollar, whether there's any further room to run when it
david: asian markets are mixed at the start of the new trading weeks. --tle progress on this u.s. on trade. why this week's election in malaysia might not be a done deal after all. too much of anything might not be a good thing. that seems to be what hong kong's ipo might be giving some investors indigestion. i'm david ingles in hong kong. haidi: i'm haidi lun in sydney. coming up, was that trying to reassure investors saying the aussie property market is on
track for an orderly slowdown. this is bloomberg markets: asia. ♪ haidi: markets searching for direction. u.s. markets kind of navigated what was a mixed bag out of the labor market numbers. unemployment looking very robust. wage growth the missing puzzle piece there. ahead,a look at what is turning out to be a pretty big week when it comes to monetary policy. david: the bank of england, we we also had the bank in the philippines, which is seen as the one moving.
there's also a week sentiment we are seeing right now. , 1.833.ctually down it would have been different in november. let's get a sense of markets. indonesia opening up. sophie: it's a mixed bag in jakarta. stocks took a snap, today drop. take a look at tokyo. stocks sliding despite the long break. electronics are falling as we see a stronger yen. it was touching 1.10 last week. aussie shares armand tainting omentum for the month of may -- tosie shares attempting maintain momentum for the month of may. doesn't see a big impact in the upcoming federal budget on the aussie dollar while most of the policy is leaked. we have a series of central-bank decisions from around the
region. we have the ring gets holding onto losses, a three-month low as foreign investors shift to sideline ahead of elections and policy decisions. it's sliding for a fourth day. that the country is back on the radar for global funds who may be looking for policy continuity, especially when it comes to foreign investment and economic transformation. i will put stocks on your radar. some indigestion when it comes to harkins ipo's. ipis falling well below price, fizzling as it shows hong kong's weakest tech ipo since 2014. it plunged as much as 11%. wanda hotels the following -- falling the most since november 9. that step into a march 14 high. a different pickup in revenue but a 6% drop of sales that month. eureka in sydney slipping after
posting in charges. it sees an uplift in the third and fourth quarters with headwinds in the rearview mirror. that can't be said when it comes to -- haidi: thank you for that. i bet of a struggle for asian stocks to get going today. let's get the first word news with paul allen in sydney. paul: two days after u.s. china trade discussions work an agreement to keep on talking and little else. china's official news agency says consensus was reached on some issues while acknowledging major is agreements on others. neither side reached the media after the talks. president trump repeated he wants fairness between the top two economies. iran spoke out against higher oil prices, signaling a split with saudi arabia, showing a willingness to keep tightening markets. the oil minister said at a price in crude is 62-60 four dollars a
barrel. they brace for u.s. sanctions on iran. lebanon's first elementary elections in nine years. the main battle is to a western and saudi backed coalition and iran backed has a lot. the incoming government will take steps to control the biggest debt burden to receive $11 billion at a conference in france. >> there is hope from the market tot majority will be formed of thent the resolution paris conference. u.k. prime minister theresa may has declared her absolute determination to make a success of leaving the eu as she comes under new pressure from conservatives on both side of the brexit debate. may again pledged to leave the
single market and the customs union. voted to side with the opposition labor party at a crucial vote coming later this month. global news 24 hours a day on air and tic-toc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. haidi: markets have been on a rough ride. these are looking up after a week of losses. stronger dollar is making assets look less attractive. greenback could be as disruptive to global markets as reversal of the correlation between stocks and bonds that we saw in february. david: interesting to note the jpm. we will revisit that later on. some are saying it might be time to buy. moneyan says it's smart
that has been selling em assets. hannah anderson is here with us. let's get more. thank you so much for coming on the show. what is your take on that? i know we were talking about china. what is the positioning right now? should they stay out until all of this sort of clears? hanna: you are seeing a good amount of money moving out of it. we think it's the smart move for investors. em is becoming more of a differentiated story than it was in 2017. bought low, sell high. that was what everybody was running with. this year, we are seeing increasing divergence within emerging markets. aroundrt money is moving within their to find the best stories and the best growth within p.m.. unlike last year, not everything is going up. david: if i look at good growth, that will lead me into markets like the philippines and things like that.
it in asia that you can argue as well. those two markets have not done very well. hannah; what you need to look for is good growth is not enough. it often's differ -- often differs vastly from their trading markets -- trading partners. if global growth is good, profits will be good. while that is true overall, the market structure varies extremely. what you are going to look for not only is good growth, but good growth of the trading partners, good growth in profits , which is not necessarily a given given the international exposure of a lot of these companies in a different country index ease. as well as a policy stance. that's why coming to the philippines is something to look at. markets were a surprise that the central bank didn't hike rates given inflation is high. but we have seen a tolerance.
so because of those inflation dynamics and central banks maybe being more cautious in moving, you are not seeing a market outperforming. i was just looking elsewhere in southeast asia. david: obviously you can't guarantee at this point whether they will hike, but he basically said it was a concern. what do you make about the earnings season? it hasn't been a bust. you look at markets like korea and things starting to roll over. is that a function of global economic activity or stronger currencies eating into others? hannah: for the first currency season, i think currencies are sinking in. there's a bit of a rollover and economic activity, but from a very high level. it's not a role down, just not as great as it once was. you will see moderation in the year-over-year earnings numbers
as well as currencies are taking a bite. that brings us back to the dollar. haidi: bringing us back to the dollar. fundamental seven changed, have haven'tndamentals changed, have they? hannah: no they haven't. over the long run, it should fall. weever in the short-term, are seeing headline risk and a lot of market narrative pushing a short-term rally which could continue over the next few weeks, maybe a couple of months. by the end of 2018, you will see the dollar come right back down. haidi: in terms of where we will be seeing the most weakness, we talked about whether it will be repaid protection, do you see spots of vulnerability for asia? hannah: because investors have the taper tantrum fresh in their mind, a lot of the bad news when it comes to the dollar and
emerging markets has are even priced in. you are seeing weakness in the reacting to any of these emerging markets -- already reacting to any of these emerging markets going on. most of the bad news when it comes to the dollar was already baked in one investors saw the dodger -- the dollars start to shoot in last week. haidi: do stay with us. we are going to talk more about oil in just a minute and how that will weigh into the inflation story. hannah anderson, j.p. morgan. getting this line through. cpi rising above $75 a barrel for the first time since november 2014. more commodities coming up. be reelected as the prime minister. mib far from being a done deal. avid: hong kong is seeing surge in ipo's and we will tell you why it's being harder to
haidi: just recapping the breaking news we had just a few moments ago. wti rising above $70 a barrel for the first time since november 2014. it's been hovering at those levels for a while. we had a bit of expectations price into that market that if we do see a u.s. withdrawal from the iran nuclear deal and the reimplementation of sanctions on iran, that will see another driver for oil prices that are already seeing stronger momentum there. five: spread their about dollars. let's take it back to equities. everything in moderation. a lot of the investors in hong kong have been helping themselves on these ipo's and trading debuts as we await for
this to perform. the good doctor a very good example today, up at the start, meandered down to the close on friday and that's where we are right below ipo price. making a killing on day one is far from guaranteed and they have lost steam despite being over 650 times over subscribers. a bloomberg's of trevor is here with us. what kind of high net worth clients are actually paying these types of stocks? and is it advisable to actually get in? >> these high net worth individuals trade almost 300 million hong kong dollars just to get to the good doctor ipo. they are now you're -- not your average mom-and-pop. they can be but they are fairly sophisticated investors. up to 90% can be margin financed. for them to get in on the high
end of the retail trench, the need to put in 300 million hong kong dollars. but that's why the good doctor was so popular. of margin high-levels financing. there needs to be enough that these investors actually gets these interest rate cost back. you have to pay for interest rates. it's essential for them to be good first-day pop. child literature last year, that popped almost 90%. good doctor, that's kind of going astray. what's the difference there? what went wrong? shuli: a good strong market needs to have ipo otherwise you are going 123456. that's all you are rolling. last year, china literature is at number seven. that got everybody really excited.
good doctor is the first one of a series of them of financial new facts. because hong kong exchange listing requirements for those innovative companies. what investors can do is say i don't like is good. to or. if i don't like them, i can wait for pictures. that's the problem. we are starting to see too many new supplies coming to market. haidi: always appreciate you joining us. shuli from bloomberg opinion. cdr's will allow domestic investors access to tech giants, alibaba and baidu, currently listed in the u.s. it will also set the stage for the shanghai. hannah anderson is still with us. last week with all the news about yummy going to market, data will be doing these cdr's,
as well. is this another step forward against the internationalization of the mainland markets? hannah: it is a positive. what you are seeing regulators do is move gradually and slowly when making these sorts of market regulations. andink that back in 2015 2016, policymakers were surprised at the reaction of markets to new regulations and the speed at which new regulations came out. this time they are taking a slow and gradual approach i need see this when they are seeking public comments on cd-r regulations. all of this goes into a campaign to clean up the financial system, which does pave the way for greater internationalization as well as investor confidence in investments in china. the same time, you put together these two things. one is de-risking campaigns at a time they deal with so many
risks in the financial market in terms of the amount of leverage built up. does that mean the internationalization, the opening up comes from greater controls and therefore is one step forward, couple of steps back at some points? think when it comes to china, deleveraging is not the same thing as a lowering the absolute level of debt, which the chinese government will increasingly turn to international markets to finance for the economy as a whole. i'm not speaking about the government debt, but more on the corporate side. will be are seeing is trying to get the financial house in order before making china a widely traded market. david: i want to get your thoughts quickly here. you say we are obsessing too much. we are going to get a chart for our clients to see the chart. we are looking at the falling averages. yields have been pushing down. what do you think we are obsessing over it?
why shouldn't we? at some point, it will kick into negative relation. ah: i think investors are too concerned about the nominal value of the 10 year yield. real yields certainly still matter because you want to be compensated for investing your money as well as inflation to your money has the same amount of value. but 10 year yields are not the bellwether they once were. treasuries are still extremely important but short-term daily moves while we believe yields were grind higher, those short-term daily moves are not telling you much about the fundamentals of the economy nor what the fed is doing, which is more impactful on the short end. on the longer end, at some point you see a negative correlation between nominal treasury yields and stock returns. however, we think that that point, while lower than it once was, we are not there yet. i guess we will just have
haidi: the philippine central bank governor has given further clues that he's preparing to raise interest rates as soon as this week. he told bloomberg television he's very concerned with friday's data showing inflation surging in april to the highest in more than five years. i have to be very concerned about this kind of development. the numbers that just came out,
it exceeded our forecast for the month. it's at the high end of our forecast range. for this year, we are really seeing a step up in inflation. it probably hasn't peaked yet. earlier mentioned, it may be around middle of the year before we see a tapering or an acceleration of inflation. back to our target range. but by next year. >> you talked about how it has spread to the white economy. what observations have you made? >> for example, the number of commodities that are growing faster than the average this one indicator that we are looking at. the driver describing inflation currently is really coming from, for example rise. which is the important part for our consumer basket.
clearly that has origins in supply-side. the second is a matter of perception. how people process this development and whether it expectationsrives for wage hikes and transfer care hikes. speaking of rate hikes, some in the markets say you are sounding more hawkish, that you could possibly be signaling a move, may 10. are you a step closer? >> the bsp is dated driven and the data tells us we are at the higher plane of inflation that it was before. so necessarily, we have to reformulate how we look at this policy and the information. haslinda: could there be successive hikes the rest of the year? is there anticipation of that?
>> again, that will have to be get a driven. we will need to assess. scenario where the position is to hike policy rates. the data will continue to come in. momentum, assess risk whether there is propagation, and whether there is a shift, continuing shift in inflation. at the end of the day, our objective here is to hit our target of it our commitment -- hit our target. our commitment is to be at the target of things. the target to be at the very least well in the middle of our target range. updatedbased on our inflation forecast, that is
within reach by next year. haslinda: so there's no risk you could be behind the curve? some people are already's adjusting you could be. -- already suggesting you could be. recordrecord -- i'm on saying that of our actions were appropriate. haslinda: what do you make of the level of pesto right now and how much a division has been done? -- intervention has been done? >> it's a very light touch in terms of the exchange rate. again, we have clarified that the best ways for market to toermine and basically react manage access volatility in the short-term. that was the filipino central bank governor there speaking with our haslinda amin. coming up, malaysia and was a rosso prepares to battle for a
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david: -- paul: north korea says u.s. sanctions are not the reason for its willingness to remove nuclear weapons from t peninsula. the west is misleading the public by characterizing those steps as a sign of weakness. accusing washington of trying to ramp up tensions between -- before a meeting between kim jong-un add donald trump. it will probably happen in singapore in juice. moved toof korea has clarify comments.
just hours after lee's remarks, and be ok released a statement released aok statement. lawyer rudy giuliani says he is leaning against -- he says such a discussion would be a trap and repeated a call for the investigation to be shut down. he also says trump would not have to sit -- comply with a subpoena. do not have to. he is the president of the united states. president clinton negotiated a deal. strikes and excessive salary demands by unions could sink europe's largest airline. the claims are unjustified and
employees must show responsibility. shares dropped the most in six --ths after a morning warning that results would fall short. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. i'm paul allen. this is bloomberg. ♪ haidi: asian markets struggling for a little bit of direction to kick off this trading week. that's start with sophie kamaruddin. sophie: given the yen's recovery, the dollar is softening. the 10 year yield is sinking lower. relation stocks are sliding for a fourth straight day ahead of the elections. jittery ase not as compared to previous elections.
we are seeing some optimism there. chinese stocks on the rise. i want to highlight what is going on in hong kong. shares have swung to gains. tencent cars ahead of its earnings. seeing lenovo over -- down 3%. when you take a look at what is helping to boost the benchmark, checking on that stock that is tracking gains in oil prices. reaching in april 2015 hi. this has crude edged above $70 a barrel -- for the first time since april 2014. we are seeing oil rally about 16% this year with geopolitics very much in play.
ahead of that, we had iran coming out against higher oil prices. saudi once to see crude closer to $80. -- wants to see crude closer to $80. david: all of those things could give the prime minister this adage when it comes to those elections, midweek. we should note that the risk to be closer than many observers think. our chief international reportsndent haslinda in for us. what is the story there? haslinda: it is a tale of two sides. --kets 22 a definite win
pointing to a definite win. ground, you will get a different perspective from all of them. it will be a very close fight. a close call. the opposition, under the leadership of the former prime minister seems to be gaining momentum. the latest poll shows that the 43.7%tion is set to win of the popular vote. that is up from 40.3%. this is being held against the backdrop of what is happening in malaysia. has become of living a key issue in this campaign. you also have the trail of billions of dollars around the world. he was implicated, has denied wrongdoing, get still this anger among some of the malaysians over the money laundering.
food onction is about the table for the average joe. it is difficult to predict what that would translate to in terms of votes. it could be closer than you think. haidi: what will it come down to? what are the key group of voters that we should be looking at? haslinda: two growth -- groups. the farmers account for the majority of the vote in 54 of the 122 constitutes these. they have been hit by the string of financial scandals. they have been giving out hand out grants to keep his support. the other group is the younger population, the younger -- population. the sense among the young is it is time for a change in
leadership. the question is whether there is a credible opposition to take its place. we will see when voters cast their ballots may 9, wednesday. thank you so much for that. she will be leading our coverage of the malaysian elections. coverage ofr live the election on wednesday and thursday. bloomberg terminal subscribers can watch us on tv . the last of australia's big four banks has reported its earnings. the country's housing market remains in pretty good shape. trading at the highest level in a month. let's take a look at the numbers first. they are pretty distant -- decent. >> a bit of comfort there.
it has been beleaguered amidst this royal banking commission they are facing. 4.2 5 billion as a cash profit. say, pretty positive on thhousing market ey have been signs that the city market has been cooling. they say mortgage, despite pressures on the householders, their most rich -- mortgage is in good shape. a solid report from westpac. david: we cannot talk about aussie banks without talking about the inquiry. any pertinent messages that we heard from the bank? >> they did not come out with any revelations. they have the usual positive standings about how they will take the necessary remediation steps and how this was all very concerning.
we will get more of that. he is on a call right now. we will get more of that. light on the civics in terms of what they will do. what is interesting from westpac is they are differentiating themselves from the rest of the banks by saying that they remain committed to their advice business. that is the one that they said they were going to off load. cba also getting rid of the business. we have had a couple other developments worth noting this morning. fitch was the first bank to downgrade the outlook on cba. i mentioned the royal banking commission is one of the reasons for that. what sort of penalties they will be hit with down the track? and thenot seen enough banking commission to justify any bank downgrades. that will be some comfort for
those beleaguered bank shareholders that have been whackedin the past -- in the last few months. it could be going into a slightly quieter period. they will be hoping for that. david: we kind of need it, don't we? thank you so much. up, we will be speaking with the chairman of the state bank of india. how the country is dealing with its industry problems of rising bad debt. that is next. this is bloomberg. ♪
bank of india has told bloomberg that corruption is not in endemic. an endemic. it has affected decision-making. to understandtant that we have to distinguish between the decisions and judgments. what might have gone wrong and if any decision has been taken wrongdoing. it is a different matter. i will not say that the endemicon has been an phenomena in the indian banking industry. because of large losses that -- anyen experienced
decisions are being looked into. that once the investigations are complete, only then we will know the truth. of cases.a number is it impacting the morale of banking? there have been quite a number of cases. is impacting the morale of banking? theown the line, across decision-makers, it does impact the decision-making. this is the reality. at the same time, there has to be a system. is that the requirement to fix and to ensure that the system works in a transparent matter -- manner and that there are no wrongdoers in the system, which is not good for any system, but especially
the financial system. businessuld impact on -- how would impact business? there is a requirement to grow the business. the bankers main job is to take deposit. -- it becomes slower. the positive side would be when making decisions, people will be more careful. is the important rationale behind the decision has to be documented. , $210ll looming large billion. why is it such a huge problem? why do the goalposts keep changing? >> i do not think the goalposts
we went through a lot of the key issues there. very quickly, have a look at our bloomberg chart. it does show you from early 2016 this group of shares has taken off and broken away from the pack. pain,e seen a period of but who has not? market conditions seem to be ok. let's have a look at this chart. 167. the broader story across india, we talked a little bit about earnings. have a look at the scorecard. reported that within financials, two out of the four -- click into that. far,s been really good so as far as sales. to do vo of the banks have reported so far. , we will be speaking
more about the challenges racing the banking sector. we will be joined i investors -- by investors. they will talk about what they think are key drivers and whether or not the structural isngend reclassification close to coming to an end. and just about 40 minutes time, you can watch that on our interactive tv function. you can find that at tv . you can also catch up on previous conversations and dive into any of the securities. become part of the conversation as well. this is for bloomberg subscribers only. this is bloomberg. ♪
this nonperforming loan ratio onl but remains vigilant increased global trade tensions. a group of store owners is opposing walmart's proposed deal with flip cart. the deal would encourage auditory pricing. considering legal action. the sale of 75% of the company will group led by walmart. netflix'smay soon see tie up with a rival. starbucks tie up with a rival. you're talking blue bottle coffee and cold brew. avengers has become the
highest grossing movie ever. it top north american sales for the second weekend in a row, generating $112 million. it has a relatively clear run and tilted release of 20th century fox release of dental two. pool two. else came back with little than are -- an agreement to talk. singapore, under the view that even though the markets do not seem to care what has been happening with this u.s. china trade tension, it seems like
tensions will eventually play out. he thinks the market should be careful about that. we will be talking about the chinese steel sector and how that will play out in terms of steel prices. a pretty packed show coming. for now, we have a battle of the chats. -- charts. david, let's have it. what is your is? -- yours? mine is fairly old school. have a look at it. what do you have? msci.ite line is the the blue line is a measure of estimated earnings for the
companies within the index. from here on, we keep talking about how central banks are normalizing policy. every on, it will be more about earning. you can see it right here. flatlining of earnings growth. stocks continue to move up. ended, you see the relation really snapping. the reason why we bring this up is simply because -- let's zoom in. we have seen earnings start to flatlining gun, short term. here is the drop in the index. does this mean that the market sees earnings falling from here? that is our chart. haidi: mine almost picks up on
yours. we start looking at fundamentals and see that we are in this stage of cycling for equities. we did have that breaking news westpac ishour that breaching $70 a barrel since 2014. regardless of whether we are or inflation,owth inflation expectations in the markets tracking along very nice. it will be a crucial next week as we potentially get this decision before may 12 either the u.s. stays or goes with the iran nuclear deal. the question is how much of that pressuring -- pricing is already factored in. saudi arabia wants closer to $80 per barrel. how much traction does this oil
price continue to have? how much more support will we see for border commodities as well? haslinda: now i get to choose the winner. both charts look very good. they dictate what the trend will be going forward. -- david, your day is today. you are it. when you take a look at those inflation earnings for a country idea of a, the whole very expensive oil is going to impact india in a very big way. it really is. if you want a sense of whether or not oil prices have actually reached that level, the first market you look at is india. we already saw a wobble.
the stock market started going lower as well. it will be something of a slippery slope for investors. haidi: it brings us back to this question of are we at peak earnings? those are the charts of the day. i will be the didn't find loser -- the dignified loser. you can decide on euro and if david's was the better chart. if david's was the better chart. is bloomberg. ♪
-- three and half year high. haslinda: struggling for direction as earnings season continues. japanese markets falling while the yen gains. david: little to show except a promise of more talks. haslinda: the hbc's long-term strength. we speak to the chief commercial officer. david: that will be a conversation we do not want to miss. we are talking about moody. slightly more to the upside. you are getting a counterweight with japan. it does not really reflect what you are seeing across most indices. yields are pushing lower across the region here.
we will be talking about oil in just a moment. exports and trade numbers out of and reservesrs through a lot of countries in asia pacific. oil is the story of the hour. -- the imposition of u.s. sanctions on iran. we are seeing a split. producer.largest oil opec says it sees prices sustainable at $60 to $65. saudi arabia calling it at $80 per barrel. the want to watch, emerging markets stocks and all the currencies. the selloff today pretty much recovering some of those losses. there are issues that will bring them down.
malaysia continues to weaken ahead of the elections this week. that's get to first word news with yvonne. yvo showing a willingnessnne: -- : u.s. crude futures had topped $70 for the first time since november 2014. the bank of karina -- central banks should raise its rate when it is possible to do so. bok said he was
speaking in general terms. lawyer said he is against president trump giving an interview to robert mueller in the investigation of russian meddling into the u.s. election. he said it would be a trap. trump would not have to comply with a subpoena if mueller issues one. >> we do not have to. he is the president of united's rates. president clinton negotiated a deal. global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. -- yvonne: global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. , the isur top story trade talks that took place late last week. the division between t two,
which laid bare those conversations. little to no attraction on the issues at hand. tom mackenzie joins us for more on this. what, if anything was achieved russian mark -- achieved? om: mostly analysts looking at these talks before they started. we did see the mood change slightly on friday. we had some positive comments from the u.s. side that suggested there was something going on in the background. on the surface come all we have is further talks. this gulf between the two sides when it comes to what they want to get out of this trade relationship. the u.s. putting forth this list of demands that includes asking china to reduce its star plus by 2020 by getting them to commit
to quarterly reviews it would no doubt rankle the chinese. they asked that china lower the barriers to access to technology and drop this investigation into chinese investments in tech. increasingly, something that they are trying to tackle. it seems that the moment, there is this big divide, whether or not the two sides can find some middle ground is the key focus now. haslinda: where do we go from here? tom: trump said he was willing to renegotiate the relationship
with china. oh course, china has said that it would retaliate as well. if you are looking for silver linings, you could possibly get one from the state media. they come out with some fairly moderate responses, no foaming at the mouth editorials. trying to avoid exacerbating the tensions. opening up, that may appease the americans. she does not expect to see any significant, detrimental effects on exports and the trade picture. if you're looking for positivity, that is something to look at. longer-term, there are these issues around technology. our china
correspondent, thank you for that. let's bring in our guest. lots of issues still to be ironed out. the markets have been pretty muted and comfortable. are we underestimating the risk -- are we underestimating the risk? yes. it is not clear at all. the u.s. is basing it strategy on. economics. i think, as a result, the markets stayed to be overoptimistic about how this will work out. people keep talking about u.s. treasuries, but there is not much that china can do. is no other market that is deep enough to sell.
because if you do so, the currency takes a hit, which you are trying to avoid as well. oftainly the operations ,usiness and imports targeted that is another tool. that is where they will be focused. david: which car do you think they will use? -- card do you think they will use? biggest be the world's at some point, but did they actually used that card? we will close at some of these areas if you do not get in line. depends on how overly aggressive they want to be. if you target your tariffs, it is a clear message. targeting through interpretation , nontariff barriers that are probably lower profile
but haven't equally damaging effect on u.s. business. if they want to be in attenuation face retaliation or getting their own back. david: there was a whopping number given. happens, there is very little reason to believe that it will take place. where does that production moved to? i think that is a random number as the start of a negotiating strategy. partly because the u.s. debt will be going up, it will not be going down. they are reducing government saving in the economy. trade deficit will
get higher. it is almost unthinkable that the deficit with china is going to be able -- i do not think that is a serious number anyways. they just realized they have to come out with a compromise that will be acceptable to both sides. the important point is that this is not going the way. the u.s. will keep coming back to any deal it might strike in the short run on trying to renegotiate it because the debt keeps on widening. richard is staying with us. now, time for our chart segment. it is the growth rate of the $1 trillion economy. the question is, whose growth rate is it? i'm guessing that richard was looking at this chart. an idea of what country is growing at 5.2%. another clue, it is coming up
with gross -- growth figures today. you can actually click on that box and send me your replies to our questions. if you need classification, you can send that in as well. it is fairly straightforward. if you have to look at a chart again, scrollback and send us your answers. richard was nodding. he knows the answer. us -- bhpicer joins bhpr joins us to discuss -- 's officer joins us to discuss. what is next for the fed? this is bloomberg. ♪
david: beautiful evening. we are moving towards midnight in new york city. low 60's there. a little chilly. .ne or two layers up 41 points on the nasdaq. jobs data come out on friday. was this low,it gladiator actually won the oscars for best picture. this.ked about a little less than expected, but it met the gold. the implications for monetary policy are being digested after
the fed kept rates on hold last week thing that inflation was near. inflation data goes up and down, month-to-month. we have made progress. i am certainly happy with where we are today. haslinda: we spoke to former rba grosvenor -- r.b.i. governor. you have to ask, if it is not having positive effects, could it have negative effects? that is when you start wondering about the leveraging of different economies. the possible consequences of that leverage, when policy titans. tightens. haslinda: inflation is not a concern at this stage. --unemployment rage
inflation is back at target. i think they are running a different risk with interest rates being so low compared to a few years back when they had a spike in the system. it is a slow moving problem. wages have to rise at some point. >> it is happening very slowly. the server is the companies show you, job shortages are their biggest problem. they are planning to what -- what -- raise wages. it is not happening so fast that the fed will worry about their stamps. viewerse will show our what central-bank agenda
.ctually looks like first week of june, which one of these should we be paying attention to? the philippines will be raising rates. south korea, australia, thailand . probably the second half of the year issue rather than a order issue. indonesia a little bit of heat. they are one of the few countries that runs a meaningful deficit in the region. seeing a little bit of pressure, but overall, the speed of american tightening is sufficiently slow. time to reasonable intact. david: we are getting a line right now. since 2014.l
headline inflation is another issue. the concern about how much of that washes into the rates. getting into levels that central banks will be worried a little bit about this. it would stop prices rising as high as $80. getting a bit of a tailwind prices. -- to prices. haslinda: what would be the impact is oil gets to $80 a if oil gets to $80 a barrel? >> india was one of the countries that everyone focused
on. it would increase thrisk on the currency side. again is a similar story. it was a temper tantrum economy. despite everything they are doing to prop up infrastructure, it is not working out. why is that? people are worried about the nationalism and domestic policymaking. the fiscal side looks good. fairly restrained. even though the election is coming up next year, people are worried about the general tone that we have seen and how that might be discouraging some investments in the economy. i have to ask you about confusion.
hugh have a governor saying that the bank of korea's should raise rates when it can. he then later came out saying that he was just talking in general terms. >> i think, no surprise that they are tilting hawkish. there is no hurry about this. the inflation numbers still under control. i think they will raise rates this year, but i do not see that there is any urgency to move anytime soon. david: let me ask you about that statement last week. the timeframe in which they wanted the 2% inflation target, they took that out. believe? should i driven byeally
embarrassment of failing to hit that target. the loss of credibility that is implied by that. seems fairly sensible from that point of view. the market, because of the history of the boj, going back on promises -- the market is always going to be suspicious. policy commitments twice in 2000 and in 2006 and 2007. automatically programmed to believe that there is something funny going on, even if it looks like a fairly benign change. go,inda: before we let you how will the dollar-yen play out? >> it depends on the geopolitics this week. if you did not get a bit of risk aversion with japan in the short run, if the iran deal falls
apart or the proposed talks with north korea follow part -- there is potential for a bounce on geopolitics. otherwise, you have to think that the rising u.s. rate environment should be giving a bit more tailwind to this dollar bounce. china seems to be fairly comfortable with where the yuan is right now. just a reminder to the u.s. that we tighten capital controls. if we wanted to be stable, it will be stable. that is another full that they have in the trade negotiations. haslinda: still to come, withber users can interact the charts using tv . analysis.n key
david: this is "bloomberg markets: asia." haslinda: a quick check of the business flash headlines. profit rose in the first quarter thanks to expanding income from mending and wealth management. -- the secondlion largest bank says it's mode ratio fell from the previous quarter, but it remains vigilant on increased trade tensions. 1.5%. earnings were out. net interest margin
2.17%. westech says the australian housing market remains in good shape with solid underlying demand and 7% of customers ahead. representingroup indian small store owners is against walmart buying a portion of flip cart. it is appealing to the commission of india and considering legal action. the cardboard has approved the sale of 75% of the company to a group led by my -- led by walmart. 1% to the upside. short of the 1600 level. is increasing. have a look at hong kong, the last 30 minutes of trade in the city. good doctor, the big debut.
haslinda: -- yvonne: north korea says that north korea sanctions are not the reason that they are considering denuclearization on the peninsula. accusing washington of trying to wrap up tensions ahead of a meeting between kim jong-un and donald trump. suddenly a newspaper the summit will probably happen in newport in june. -- in singapore in june. an agreement to keep talking and little else between china and
the u.s. acknowledging major disagreements on certain issues. they raised the media after the talks. fairness int wants the deal. fines on three institutions for transactions -- transgressions. the penalties were imposed on china merchants bank, shanghai development for more than a dozen violations each. the largest fines since they reshuffled the regime in march. the bank governor has given further clues that he is prepared to raise interest rates. very concerned with friday's data. searching the highest in more than five years. >> we are really seeing a step
up. earlier, mentioned that it may be around the middle of the year we see acceleration of inflation through our target range. yvonne: global news 24 hours a day, on air and at tictoc on twitter, powered by more than 2700 journalists and analysts in more than 120 countries. this is bloomberg. you are watching "bloomberg markets: asia." --id: i'm david a place here david ingles in hong kong. china is already on a lunch break and japan is coming up. let's get a sense of where we are with sophie. sophie: nikkei 225 down one third of 1% after returning from
that golden week holiday. is weighing on electronics makers. the dollar eases its recent gains. also, check what is going on in malaysia. asian equities are gaining 1%. later today.re due rise in u.s. rates and higher oil prices. crude is continuing to climb. tracking that rise in oil prices in hong kong. i want to show you this on a chart right here. the highest in three years. and the indexite the line in blue. among the biggest boost for the
hang seng. good doctor has slumped below its ipo price. it is a shock to investors enthusiasm, fizzling for the company, which is not living up to the hype. firm addedlued the 2020 sale. that for the good doctor. stay with thes markets and do a quick check of work oil prices are right now. for the $70 a barrel first time in more than three years. trade is bracing for sanctions. iran is the third largest oil producer within opec. all eyes are on oil to see where it has from here. up 60% already here today. a lot of theng
economics out there at these levels. we will talk more about the economics of this later on. guests to the our conversation. to chief commercial officer talk more about this. the new report on steel. we will talk about your new report in just a moment. i want your oughts and wre we go here with oil prices. you do have an exposure to this sector. >> absolutely. good to be back. prices, i think they have been very clear that we would expect mortgage to rebalance this year. that is what we see happening. elements.litical we will see how it goes. so far, we will see how the
markets are trending. david: a lot of people in the industry of talked about this. you want the outlook on shale and oil, but he also talked about taking your expertise within the u.s. show market and applying that else -- shale market and applying that elsewhere. we have looked at the shale business in 2010. we underestimated the supply opportunities. at the moment, how we see the market is very flat. we have been quite clear. of, the combination theinuous decline in resource-based, as well as strong demand, we see an opportunity for additional oil to be introduced between four
and 5 million barrels a day. give antinues to relatively sharp curve. good marginal opportunities for really strong, conventional business. haslinda: i want to continue with the shale story. bhp has talked about how they will acquire it and spread into the world. where are you with this? how soon will this happen? did, early on, basically we did a shale study and we came to the conclusion that we do not see big shale development and the rest of the world. there was a big driver for us to determine shale to not be part of our core business. to split theision
portfolio. the steelmoving on to . we are seeing ships within the steel sector in china. within the steel sector in china. how do you see this playing out? >> it has been extremely interesting. trends that started many years -- it is going bigger, going to the coast. recently, a stronger environmental overlay as well. last 12 to 18 months, it has been overlaid by the supply side reforms. margins for the steel industry have been much healthier. this is driving a continuous demand for higher quality raw in -- and iron
ore. as we will share later today, we think these differentials will be sustainable for two thirds of what we have seen last year. david: you are saying that these major shifts in the chinese steel sector will be driving higher demand for the high-quality stuff. the ability across many of the steel mills in china, we are at half compared to several years back. the off sick, say that this will actually drive demand for the lower quality stuff. how would you respond to that? >> the us seen the steel -- we have seen the steel industry at zero profit or low profit for many years. in the recent 18 months, on
the back of utilization rates 85%, weck up towards have seen a much stronger focus on productivity. believe -- it is confirmed. our biggest customers in china and what we can read in the official cleanse from beijing government is that a longer-term utilization rate over 80% is targeted as a sustainable rate. withu overlay that demands, productivity, and the environmental challenges will mills withstal steel imports of higher quality, cleaner coal in our order. longer-termabout trends as far as volumes are concerned. do you expect volumes to taper off?
do we see the same level 10 years from now? >> what we see is that our steel outlook has been unchanged for many years, while we have seen double-digit growth behind us. we still see that there is growth for steel consumption in china, roughly 1% on a yearly basis. growthbut sustainable towards the midst of the next byade, supported opportunities, which will increase steel demands in areas of china. decade,the end of next we see a slow demand tapering for steel and iron ore. haslinda: you talked about higher quality supplies. what is the plan to bring on more higher swap -- high quality
supply? >> at the moment, our target is to produce 290 million tons. we currently have no plans beyond that. that oneion for us is of our resources, it is coming to it -- the end of his life. we have to invest on capital to stay atd our current -- our current production levels. we hope to take a opposition to the boards later this year, where the board can improve to invest in an area that is called southling. it is higher iron. moreve higher iron ore and lump that will support the
environmental china -- agenda in china. haslinda: what are the assumptions you are making about deal prices -- steel prices? >> we assume that margins will continue to be healthy and that two thirds of what we saw last year. prices itself are little less important for us. margins in thet industry. we expect to continue to see an that will have a utilization rate around 80%, and therefore an industry which will continue to be profitable. david: speaking of profitable, he talked a little bit already about margins. give us a sense of where you think margins are going to head because of these permanent changes within the chinese steel sector? ofwe would say the margins
the steel industry would probably be around the 5% level. that is where they have been initially. they have been for many years close to zero, but we expect .ustainable margins between 4% talking about this new report that came out with what this means for steel and iron ore. our bloomberg of clients, check out this function. take a look at this. it gives you price updates on what i would imagine a daily basis. just scroll down. these army bar prices. prices.ebar scroll down and you eventually move to other steel products like steel plates to sheets.
you can get spot prices for iron ore across different areas in china. check that function out. a lot of information. more information is better than none. haslinda: cool function there. we will talk more about the challenges facing india's banking sector. we will be joined by moody investors. this is bloomberg. ♪
recent rise in oil. it has turned the ruby into the worst trade in asia. filing in dollars would yield a -3% compared to a kerry return of 12% back in 2017. for the ruby weakness, that might or the r.b.i. to tighten inflation. we are keeping an eye on pfizer india. big want to watch. we will watch for any sign of management changes. the stock gaining about 4/10 of 1%. we actually spoke with the chairman and told them that corruption in a friend -- notncial sector service is an endemic phenomena --
phenomenon. important.ally to understand that we have to distinguish between the commercial decisions and judgments, which might have grown. if any decision has been taken -- if there is evidence of wrongdoing, it is a different matter. i would say that the corruption has been an endemic phenomenon in the banking industry. losses,of the large -- only then we
will know the truth. is it impacting the morale of banking? proof against anyone -- it does have impact on the moral of the person that is being investigated but down the line also, across the decision-makers. impact thet decision. this is reality. , the questionme is between the requirement to fix and ensure that the system ,orks in a transparent manner that there are no wrongdoers in the system. it is not good for me or any system. impacta: how would it
operations and businesses? everybody is in business. there is a requirement to grow the business. the banker's job is to take deposits. definitely, the decision-making. it might become slower. be whentive side would taking positions, people will be more careful. what is important is the rational behind the decision-making has to be properly documented. $210 billion embezzled. why is it still such a huge problem? why did the goalposts keep changing? >> i do not see the goalposts changing. , theast two years
recognition part is almost complete. not using the word almost. had year by march, we recognized all of our npl. tendered in certain circumstances. some npl.en hopefulr, i am really that the npl number in terms of growth will come down. haslinda: let's bring in our guest to get her perspective on it. he talked about how corruption is not in endemic at all. we have seen scandal after scandal.
your take on it? >> it has been quite negative, especially this half of the year. that itwell-known issue has caused the issues of the banking system. we have seen in the banking system are not just because of the economic conditions or external market, but also because of corruption. we do not hear that frequently out of investigations. the prospects are for asian banks? >> the earnings season is just beginning. among the big lenders, axis bank among the results. the results, probably met our expectation in that npl recognition is coming to an end. the bank gave indications around it. expect that earnings would
be under pressure for the other banks. for the public sector banks, we expect profitability will be under more pressure. david: you mentioned we are coming to the end of the on thetion of bad assets balance sheet. can you give us a number, broadly? how many years do you see this persisting issue? >> we think a commission is coming to an end. we expect that much of the npl being recognized over the next few quarters. perhaps two to three quarters. do not think they should go on for too long. her son estimates, we think they are around 300 basis points to get recognized. the is under the schemes that the r.b.i. had given to thinks.
we do expect commission will comment to an end within the next few quarters. david: consolidation in the public banking space, how many public banks d.c. in india? -- do you see in india? we do think that the number of public sector banks is to come down to the single digits or low double digits can be good ,or management perspective whether it would give more power or capacity for banks for big men think decisions. even from the management arspective, from shareholder's perspective, it can be much easier to manage a handful. david: we have to leave it there. one last look at the charts.
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